PNC Financial (PNC) PriceWatch Alert With 16.84% Downside Protection

Posted: Wednesday, June 24, 2009 8:07 AM EDT

PNC Financial (NYSE: PNC) closed yesterday at $39.19. So far the stock has hit a 52-week low of $16.20 and 52-week high of $87.99. PNC Financial stock has been showing support around 37.51 and resistance in the 40.73 range. Technical indicators for the stock are Bearish and S&P gives PNC a neutral 3 STAR (out of 5) hold rating. PNC appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Nov '09 37.50 covered call (PZH KS) for a net debit in the $32.59 area. That is also the break even stock price for this trade. This covered call has a 150 day duration, provides 16.84% downside protection and a 15.07% assigned return rate for a 36.66% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the PNC Jan '10 22.50 Call (PAJ AX) and selling the Nov '09 37.50 call (PZH KS) for an $11.20 debit. The trade has a 150 day life and would provide 14.01% downside protection and a 33.93% assigned return rate for an 83.00% annualized return rate (for comparison purposes only). PNC Financial has a current annual dividend yield of 1.00%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]

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